Alternatives to lay-offs: 1 truth

Many managers, along with the business analysts and investors who evaluate the financial impacts of managers’ decisions, actually believe that layoffs work– despite much evidence to the contrary.

Most think that layoffs really do make an organization more lean, less expensive to run, and more efficient.

However, there are many hidden costs to layoffs. Yet, despite all the data that show how ineffective layoffs are at reducing costs, or how much organizational knowledge is lost when workers’ jobs are eliminated, or how an organization’s capacity to respond to the marketplace is crippled , people still believe that layoffs cut costs.

Because their confidence in layoffs as a cost cutting strategy is so strong, managers and business analysts validate and legitimate the decision to lay people off. They ignore the data that show no post-layoff increase in efficiency , no post-layoff increase in share price, and the high cost of lost expertise.

It’s easy to ignore the truth when everyone around your is busy cutting headcount.

What’s more salient to these lemmings is the validation of going along with the group– a certain kind of herd mentality, if you will.

It’s not that managers are stupid, or intentionally making bad choices.

They are just doing what they are rewarded for and what they believe is right, even though it’s wrong. Thus, organizations continue to choose layoffs, even when cutting head count takes them perilously close to the brink.

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Published by Fred Zimny

A management executive for over 25 years. Successfully managed transition programs and front office operations within numerous Dutch companies.
Into service design, service management and service innovation.
Expertise:
Service design
Service economy
Service innovation
Service marketing
Service management
View all posts by Fred Zimny